The Indian rupee is likely to open slightly higher on Monday after the dollar declined to its lowest in over two months against a basket of major peers.
Non-deliverable forwards indicate the rupee will open at around 83.24-83.25 to the US dollar, compared with 83.27 in the previous session. Brent crude rose in Asia trading, adding to the 4 per cent rally on expectations of OPEC+ deepening supply cuts.
The rupee last week was not able to take much advantage of the slump in the dollar and the fall in US yields on bets of the Federal Reserve likely opting for interest rate cuts in May 2024.
The dollar index fell 1.8 per cent last week, the worst performance since mid-July. The index was down to 103.66 on Monday, the lowest since September. Asian currencies were mostly higher
“It looks like it is setting up to be like last week.. rupee will do much in the face of the dollar’s struggles,” a forex trader at a bank said.
“And let’s say, for whatever reason, the dollar turns later this week, then too the rupee will not budge. It will be a quiet week, again.”
The dollar could not draw support from comments by Fed officials that were not compatible with the 100 basis points of rate cuts that investors are pricing in for next year.
The Fed is not certain it has done enough to get inflation on track toward its 2 per cent goal, but the full effect of its rapid rate increases to date may be yet ahead, San Francisco Fed President Mary Daly said on Friday.
Meanwhile, Boston Fed President Susan Collins said the US central bank must be “patient and resolute, and I wouldn’t take additional firming off the table.”
“Fed speakers are currently gently pushing back against an early cut in rates next year,” ANZ said in a note.